The 20th Century Myth of Economic Freedom is Falling Apart
It might be an opportunity to have a serious discussion about economic freedom
In the late 20th century, a particular idea of ‘economic freedom’ swept across libertarian and conservative circles, and then into the mainstream. The transformational presidency of Ronald Reagan and prime ministership of Margaret Thatcher were largely premised on this kind of economic freedom. Even the center-left had to bend to this notion of economic freedom, with Bill Clinton and Tony Blair famously coming up with the ‘third way’ compromise in the 1990s.
After the Global Financial Crisis of 2008, the aforementioned kind of ‘economic freedom’ suddenly became much less popular. At first, it was happening only on the left. A new wave of sometimes socialism-curious economic populism swept through the young left, culminating in the rise of Bernie Sanders, Jeremy Corbyn and Jean-Luc Melenchon. At that time, the right was still in the grip of the Tea Party moment, committed to opposing basically all government intervention in the economy. However, with the rise of Donald Trump, the right also began to decisively reject Reagan-Thatcher style ‘economic freedom’, perhaps in ways even more drastic than the left. For example, Trump brought back protectionism, high tariffs and trade wars. Later on, other right-wing politicians like Ron DeSantis even started a campaign against ‘woke corporations’, thus attempting to bring the full force of government to bear on the way private business is run. This left-right inversion in commitment to economic freedom is even evident in the kind of country that each side looks up to. Out of all the existing countries around the world, the left most admires Scandinavian social democracies like Sweden, Norway and Denmark, which are all ranked inside the top 10 in the Heritage Foundation’s index of economic freedom. On the other hand, the right is most known for admiring Hungary these days, which is ranked a lowly 72nd on the aforementioned index. (I’m not saying that the Heritage Foundation’s index is necessarily the best measure of economic freedom, but it has long been a well accepted measure among those committed to the Reagan-Thatcher program.)
To be honest, I am disappointed at the sudden move against economic freedom, particularly the total inversion we are seeing on the right. However, if we are to make the notion of economic freedom popular again, we need to acknowledge that the Reagan-Thatcher program was flawed and inherently unsustainable, and in many ways did not represent true economic freedom either. For example, using taxpayer dollars to pay for corporate welfare is certainly not economic freedom. Nor is running up military spending to pay for the unpopular endless wars. Moreover, 19th century style laissez-faire economics is simply inadequate for the modern world, and any attempt to replicate it in the modern world is likely to implode eventually, and lead to the rise of the opposite, as we saw during the 2010s. Therefore, we need to move to a more sophisticated understanding of what constitutes economic freedom.
The 20th century view of ‘economic freedom’ actually developed in the context of a variety of factors particular to the 20th century. There was a strong backlash to FDR’s New Deal in parts of America, which led to a generalized fear of ‘big government’. Some of this backlash was associated with pro-segregationist forces in the South, and racism, rather than economic freedom, was often the real intention there. And there was also the Cold War, which distorted the political discourse in multiple ways. The presence of the Soviet Union and its model of state communism led to the misguided idea that any government intervention in the economy is a step towards Soviet style communism, which would mean the death of economic freedom. While the Cold War ended in 1989, this mentality extended well into the 21st century, with the Tea Party right calling ‘Comrade Obama’ a ‘communist’ for introducing Obamacare. However, as the Obamacare example shows, this mentality is making less and less sense over time.
According to the Heritage Foundation’s index, Singapore is considered to be the world’s freest economy. However, Singapore is definitely not running the Reagan-Thatcher program. The Singaporean government has led the construction of very good infrastructure for the country, which benefits the everyday life of its citizens, and also helps to attract investment. Singapore also has one of the world’s best and most extensive public housing programs. These are certainly not what Reagan-Thatcher small government ideology would allow for, but it is actually what makes Singapore’s free and prosperous economy possible, and most importantly, sustainable. The examples of Scandinavia and Singapore show that there’s really no incompatibility between a strong social safety net and a free economy.
Originally published at https://taraella.substack.com.
TaraElla is a singer-songwriter and author, who is the author of the Moral Libertarian Manifesto and the Moral Libertarian book series, which argue that liberalism is still the most moral and effective value system for the West.
She is also the author of The Trans Case Against Queer Theory and The TaraElla Story (her autobiography).
